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Saudi banks' distressed loans down 4% to SR16bn in Q2

August 19, 2014


The volume of non-performing (distressed) loans in the Saudi banks dropped by 4 percent to SR16 billion by the end of Q2, 2014, compared to SR16.8 billion in the same period last year, according to a financial report.

The coverage of accumulated provisions to the distressed loans in the Saudi banks grew by 165 percent in Q2 compared to 157 percent in Q2, 2013, the report, carried by Al-Eqtisadiah daily, said.

The accumulated provisions grew by 1 percent to SR26.5 billion compared to SR26.3 billion in the comparable periods, the report added.

Bank Albilad and Arab National Bank (ANB) captured the highest coverage rate of provisions to distressed loans at 208 percent whereas Bank AlJazira had the least coverage rate at 136 percent.

However, Al-Rajhi Bank and the National Commercial Bank (NCB) acquired the biggest portion of accumulated provisions at 20 percent and 18 percent, respectively, of all provisions set aside by Saudi banks by the end of Q2, the report said.

The Saudi banks set aside provisions worth SR1.33 billion in Q2 compared to SR1.26 billion in the same period last year, or an increase of 5 percent, the report said.

The banks normally set aside provisions aimed to safeguard the banks from possible failure of customers to repay loans though they put pressures on their profits. However, the provisions are reflected as profits if not used to cover the distressed loans, according to the report.

Al-Rajhi Bank captured the biggest accumulated provisions among the Saudi banks by the end of Q2 at SR5.15 billion (20 percent), followed by the NCB at SR5.14 billion (19 percent), the report said.

The two banks also captured the biggest portion of the distressed loans by the end of Q2 at SR3.2 billion and SR2.9 billion, respectively, the report added.

Other banks had different sizes of distressed loans by the end of Q2 as follows: ANB at nearly SR1 billion, Bank AlJazira at SR790 million, Bank Albilad at SR435 million and Saudi Investment Bank at SR427 million, the report said.

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Source: Arab News (Saudi Arabia)

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